Last updated: January 19 2016
It has become easier to raise money for private businesses in Canada. Securities regulators in five provinces—Alberta, BC, Saskatchewan, Manitoba, and New Brunswick—announced last week that they were adopting a prospectus exemption for issuers listed on a Canadian stock exchange. The opportunity: to raise money by distributing securities without the need for an expensive prescribed offering document.
A key condition under the exemption is that an investment dealer must provide advice to an investor regarding the suitability of the investment, by meeting its know-your-client and know-your-product obligations.
In the past, the filing of the required offering document was extremely onerous and costly to prepare and so rarely used. This affected retail investors negatively: They did not have the same opportunity to participate in more favorable terms, such as discounts to current market pricing, offered through private placements. Their only option was to purchase in the secondary market.
According to the news release issued on January 14, “the exemption is intended to facilitate capital raising for listed issuers and foster participation of retail investors in private placements, while maintaining appropriate investor protection.”
Other key conditions outlined by the regulators and itemized in the release include:
The Multilateral CSA Notice describing the exemption is available on participating CSA members’ websites.
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